Factories do not have money to pay workers their salaries as RMG leaders fear work order loss of $5 billion
Order cancellations and withdrawals by global brands and retailers may be an early sign of the job losses for many more apparel workers.
The apparel factories are now unable to pay employees for June and onwards as the western retailers and brands are not taking the orders they placed before the Covid-19 pandemic.
Expecting a bleaker future, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said, "There is no new export order. So, more job cuts are inevitable."
She said, "From June, workers will be terminated. This is an unexpected reality for the industry. Almost every factory is running at up to 55 percent capacity now. And we do not know what lies ahead.
"We paid workers for April and May with the low-cost loans the government offered us at only 2 percent interest. Now we have no money to pay workers for June.
"Apparel buyers cancelled and held up work orders worth $3.15 billion so far. Of which, we were able to renegotiate only 26 percent orders and brought those back.
"Overall, we may face a hit of $5 billion."
Many factories that faced order cancellations have already been forced to close their operations and terminate all workers.
The BGMEA data shows over 400 factories have already shut down.
If there were 1,000 workers in each factory, on average, the number of people who lost their jobs would be 0.4 million.
The BGMEA chief said they "have been looking for options, like donations from different international organisations and countries."
"Many of the probable donors backtrack when they hear the amount – nearly half a billion dollar a month."
"However, labour rights groups also asked retailers and brands to pay all workers in their supply chain in this time of the pandemic. But they did not respond yet.
"Factories without orders have no option but to shut down and terminate workers.
"Apparel makers invested big to comply with Accord-Alliance and international standards. They also spent a lot on business expansion. So none of them can pay workers without work."
However, the factory owners are largely not following the labour law which requires serving a prior notice before terminating any worker, the labour leaders said.
Meantime, the European Union recently gave assurance to approve a €93-million grant for one million Bangladeshi apparel workers who were either laid off or would permanently lose their jobs because of the Covid-19 pandemic.
Also, German Minister for Economic Cooperation and Development Dr Gerd Müller assured a €20million grant for the apparel workers, the BGMEA said.
"A collective government to government initiative involving all sourcing countries must begin," said Rubana.
"As the Covid-19 crisis unfolds, we all have realised that we need an unemployment scheme for the workers. Everyone needs to come up with a collaborative plan to support the workers who will, most, unfortunately, lose their jobs.
"The impact of Covid-19 will last till at least spring 2021 as shoppers will buy less. Ahead of next Christmas, apparel makers may get some orders. But we do not expect it to be massive."
Meantime, labour leaders said many apparel factories were terminating workers claiming that they did not have work orders.
Factory owners terminated workers following several sections of the labour law – such as sections 12, 16 and 20 – showing that they have no available work orders, said Nazma Akhter, president of the Sommilito Garments Sramik Federation.
"Since the end of Eid vacation, I have received many calls every day from terminated workers," she said.
Nazma also urged the buyer countries to ensure payment for workers during the pandemic as all buyers and brands have a responsibility towards them.